ESTATE TAX CHANGES
Estate Tax Law for Married Couples
New estate tax laws offer a break for spouses that kicked in on Jan. 1: portability. Portability allows a surviving spouse to add the unused portion of their deceased spouse’s estate tax exemption ($5 million) to their own, enabling a married couple to pass on up to $10 million tax-free.
Here’s what married couples need to know about portability, extracted from Forbes news:
* Portability applies only to those who die after Dec. 31, 2010
* Portability applies to lifetime gifts as well as assets that pass through an estate plan
* Portability is not automatic; the executor must pass the unused exemption on to the surviving spouse
* If a surviving spouse remarries, he or she can only use the unused exemption of the new spouse
* Portability does not apply to the exemption from the generation-skipping transfer tax
* Couples with estates of less than $10 million can now leave everything to each other without a bypass trust – although if you want to shield assets from creditors or benefit children from a previous marriage, a bypass trust is still a good tool to use
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